Inflation at 4-month high in Feb, Industrial growth slows down to 1.7%
New Delhi, Mar 12: Retail inflation inched up to a four-month high of 2.57 per cent in February, though it is still below the RBI's benchmark, raising hopes of another round of rate cut in April to boost industrial growth which slipped to 1.7 per cent on account of manufacturing sector slowdown.
According to the data released by the Central Statistics Office (CSO), the Index of Industrial Production (IIP) expanded by just 1.7 per cent in January, significantly down from 7.5 per cent growth in the year-ago month.
The CSO, however, revised marginally upwards the IIP growth number for December 2018 to 2.6 per cent from the earlier estimate of 2.4 per cent.
Slowdown in industrial production notwithstanding, a marginal increase in inflation raised the clamour for another round of rate cut by the Reserve Bank on April 4 to boost economic activity. The central bank had reduced the key lending rate (repo) by 25 basis points in February.
Following the RBI rate cut, many banks announced up to 10 basis point reduction in their lending rates.
Another set of data released by CSO showed that retail inflation based on Consumer Price Index (CPI) inched up mainly due to firming up of food prices.
Though Headline (inflation) is showing an increase, the core CPI component moderated again to 5.3 per cent in February 2019 from January 2019 level of 5.36 per cent, the country's largest bank SBI said in a research report.
The retail inflation number for February 2019 is the highest since October 2018 when it stood at 3.38 per cent, the data released by the Central Statistics Office under the Ministry of Statistics and Programme Implementation (MoSPI) showed.
On monthly basis, consumer food price index moved up by 0.15 per cent in February against January 2019.
Food inflation was lower at (-) 0.66 per cent in February against 3.26 per cent in the same month last year. The retail inflation in February 2018 was at 4.44 per cent.
In fuel and light category, the rate of price rise slowed to 1.24 per cent from 2.20 per cent in January.
On IIP, SBI said the numbers are disappointing.
The growth rate of manufacturing sector dropped sharply to 1.3 per cent in January from 8.7 per cent in January 2018. There was also slump in the power generation segment as the expansion was almost flat at 0.8 per cent compared to 7.6 per cent in the year-ago month.
However, the silver lining was the mining sector which grew by 3.9 per cent in January this year compared to 0.3 per cent in the year-ago period.
Giving more details about the factory output in the country, the CSO said capital goods segments, considered to be barometer of investment, and the intermediate goods segment witnessed a contraction.
Data also revealed that both growth in production of consumer durable and non-durable goods grew at a slower rate in January compared to the year-ago period.
The IIP growth during April-January period of the current fiscal stood at 4.4 per cent compared to 4.1 per cent in the same time frame a year ago.
Commenting on the data, B Prasanna, Head, Global Markets Group, ICICI Bank said industrial growth dipped below expectations in January 2019, with manufacturing and electricity sectors decelerating considerably.
On monetary policy, Prasanna said: "We expect another rate cut in the April meeting and subsequent action would be data dependent."
Ranen Banerjee of PwC India opined that lower IIP numbers and inflation of slightly over 2.5 per cent give headroom for further monetary policy action by the central bank.
RBL Bank Economist Rajni Thakur also suggested that the latest CSO data calls for a rate cut.
"...there clearly is a case and space for one more rate cut of 25 bps by RBI in April to support growth," she said.
The six-member Monetary Policy Committee (MPC) of the RBI will meet for three days and announce the first bi-monthly monetary policy of the next fiscal on April 4.
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India, Ethiopia elevate ties to strategic partnership as PM Modi holds talks with his counterpart
Addis Ababa (PTI): India and Ethiopia on Tuesday elevated their historical ties to a strategic partnership, as Prime Minister Narendra Modi held wide-ranging talks with his Ethiopian counterpart Abiy Ahmed Ali during which they discussed issues of bilateral and mutual interest.
Modi, who arrived here from Jordan on his maiden bilateral visit, was accorded a ceremonial welcome at the National Palace ahead of the bilateral talks, reflecting the vibrant India-Ethiopia relations rooted in shared history and a promising future.
"We are elevating India and Ethiopia relations to a strategic partnership. This step will provide new energy, new momentum and new depth to our ties," Prime Minister Modi said during the delegation-level talks.
He thanked PM Ali for his support in India's fight against terrorism. "The support of friendly countries in this struggle against terrorism holds great significance," Modi said.
"Today, we got the opportunity to deliberate on the key aspects of our cooperation, such as economy, innovation, technology, defence, health, capacity-building and multilateral cooperation. I am pleased that today, we have decided to double the student scholarship for Ethiopia in India," Modi said.
Modi said that India and Ethiopia have shared contact, dialogue, and exchange for thousands of years. The two countries, which are rich in languages and traditions, are symbols of unity in diversity, he added.
"Both countries are democratic powers committed to peace and the welfare of humanity. We are co-travellers and partners of the Global South. On international platforms, we have stood shoulder-to-shoulder," he said.
The two sides signed eight MoUs/agreements, including upgrading ties to 'Strategic Partnership', customs cooperation, establishing data center at the Ethiopian Foreign Ministry, UN Peacekeeping training cooperation, debt restructuring under G20, more ICCR scholarships and AI short courses for Ethiopians, and support for maternal and neonatal healthcare.
Modi said the African Union's headquarters in Ethiopia makes the country a meeting point of African diplomacy. "Inspired by the common vision of an inclusive world, in 2023, India ensured that the African Union became a G20 member," he said.
In 2023, during India’s G20 Presidency, the African Union was admitted as a permanent member of the G20.
Modi said that though this is his first visit, he felt a deep sense of belonging and warmth, reflecting the thousands of years of connection between the two countries.
On his part, Prime Minister Ali said the two countries share over thousands of years of connection through trade, diplomacy, education, culture and even in our food and traditions. "These ties continue to shape a deep friendship, collaboration and mutual respect between our people," he said.
"We also appreciate your consistent message that Africa's priorities must lead the partnership. These kinds of dignified, respectful messages for Africa are very important. Mr Prime Minister, keep pushing. That is the type of message we are expecting from all our trusted friends," Ali said.
He said this aligned fully with Ethiopia's development plan - African-owned, African-led, and African-defined.
"Today, we meet with a clear focus to shape a modern partnership, grounded in sovereignty, self-reliance and practical cooperation. Our cooperation is rooted in equality and South-South solidarity," he said.
"Our economy is performing strongly. Last year, we grew 9.2% and this year we are expecting 10.3% GDP growth. Besides GDP growth, our FDI inflow is also rising big time. India is the leading source for our FDI," he said.
"We have more than 615 Indian companies which are investing in Ethiopia. This all gives our cooperation a strong foundation of trust. I think our decision today that we elevate our historic relationship to a strategic relationship is the right decision," he added.
Ethiopia also conferred its highest award - The Great Honour Nishan of Ethiopia - on PM Modi. He is the first global head of state to receive this award.
Prime Minister Modi also went to the Friendship Park and Friendship Square in Addis Ababa with PM Ali.
In a warm and special gesture, PM Modi was earlier received by his Ethiopian counterpart at the airport and accorded a warm and colourful welcome.
"Ethiopia is a nation with great history and vibrant culture," Modi said.
PM Ali informed his Indian counterpart about the varieties of Ethiopian coffee during informal talks.
"At Addis Ababa airport, took part in a traditional Coffee Ceremony with Prime Minister Abiy Ahmed Ali. The ceremony beautifully highlights Ethiopia’s rich heritage," Modi said.
In a unique gesture, the Ethiopian Prime Minister drove Modi to the hotel.
On the way, he took a special initiative of taking PM Modi to the Science Museum and Friendship Park, which was not in the itinerary.
"Gratitude to Prime Minister Abiy Ahmed Ali for showing me glimpses of Ethiopian history and culture at the National Palace Museum in Addis Ababa. It was a powerful reminder of Ethiopia’s rich traditions," Modi said in a post on X.
The Nobel Peace Prize-winning Ethiopian PM’s special gestures show remarkable respect for Modi, sources said.
"Thank you Ethiopia for a welcome that was unforgettable. The Indian community showed remarkable warmth and affection. India-Ethiopia friendship is going to get even more robust in the times to come," Modi said.
When Modi arrived at the hotel, he was warmly welcomed by the members of the Indian community. Local artists performed dances. Some of them danced on the theme of the popular Hindi song 'Aisa Des Hai Mera' to welcome him.
On Wednesday, Modi will address the Joint Session of Parliament and share his thoughts on India's journey as the "Mother of Democracy" and the value that the India-Ethiopia partnership can bring to the Global South.
PM Modi arrived in Ethiopia from Jordan, where he held a one-on-one meeting with King Abdullah II at the Husseiniya Palace on Monday before the delegation-level talks.
India and Jordan also inked MoUs in the fields of culture, renewable energy, water management, digital public infrastructure and twinning arrangement between Petra and Ellora, aimed at giving a major boost to bilateral ties and friendship.
From Ethiopia, Modi will visit Oman on the final leg of this three-nation tour.
